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16. What is required of a taxpayer who is being audited?A Taxpayer who is being audited is obliged to:

Duly acknowledge his receipt of the appropriate Letter of Authority upon its presentation by the Revenue Officer authorized to conduct the audit by affixing in the Letter of Authority the name of the recipient and the date of receipt.

Present within a reasonable period of time, his books of accounts and other related accounting records that may be required by the Revenue Officer; and

Submit the necessary schedules as may be requested by the Revenue Officer within a reasonable amount of time from his (Taxpayer’s) receipt of the Letter of Authority.

17. What is the recourse of a Taxpayer who cannot submit the documents being required of him within the prescribed period of time? If a Taxpayer, believing that he cannot present his books of accounts and/or other accounting records, intends to request for more time to present these documents in order to avoid the issuance of a Jeopardy Assessment, the Taxpayer may execute what is referred to as a Waiver of the Statute of Limitations.

18. What is a Waiver of the Statute of Limitations? The Waiver of the Statute of Limitations is a signed statement whereby the Taxpayer conveys his agreement to extend the period within which the Bureau may validly issue an assessment for deficiency taxes. If a Taxpayer opts to execute a Waiver of the Statute of Limitations, he shall likewise be, in effect, waiving his right to invoke the defense of prescription for assessments issued after the reglementary period.

No Waiver of the Statute of Limitations shall be considered valid unless it is accepted by a duly authorized Bureau official.

19. If a Taxpayer does not agree with the assessment made following an audit, can he protest this Assessment?Yes, he can. A Taxpayer has the right to contest an assessment, and may do so by filing a letter of protest stating in detail his reasons for contesting the assessment.

20. What are the characteristics of a valid protest? A protest is considered valid if it satisfies the following conditions:

It is made in writing, and addressed to the Commissioner of Internal Revenue;

It contains the information, and complies with the conditions required by Sec. 6 of Revenue Regulations No. 12-85; to wit:

a.) Name of the taxpayer and address for the immediate past three (3) taxable year.

b.) Nature of request whether reinvestigation or reconsideration specifying newly discovered evidence he intends to present if it is a request for investigation.

c.) The taxable periods covered.

d.) Assessment number.

e.) Date of receipt of assessment notice or letter of demand.

f.) Itemized statement of the findings to which the taxpayer agrees as a basis for computing the tax due, which amount should be paid immediately upon the filing of the protest. For this purpose, the protest shall not be deemed validly filed unless payment of the agreed portion of the tax is paid first.

g.) The itemized schedule of the adjustments with which the taxpayer does not agree.

h.) A statement of facts and/or law in support of the protest.

The taxpayer shall state the facts, applicable law, rules and regulations or jurisprudence on which his protest is based, otherwise, his protest shall be considered void and without force and effect on the event the letter of protest submitted by the taxpayer is accepted, the taxpayer shall submit the required documents in support of his protest within sixty (60) days from date of filing of his letter of protest, otherwise, the assessment shall become final, executory and demandable.

It is filed within thirty (30) days from the Taxpayer’s receipt of the Notice of Assessment and formal Letter of Demand.

21. In the event the Commissioner’s duly authorized representative denies a Taxpayer’s protest, what alternative course of action is open to the Taxpayer? If a protest filed by a Taxpayer be denied by the Commissioner’s duly authorized representative, the Taxpayer may request the Commissioner for a reconsideration of such denial and that his tax case be referred to the Bureau’s Appellate Division. The Appellate Division serves as a "Court", where both parties, i.e. the Revenue Officer on one hand, and the Taxpayer on the other, can present testimony and evidence before a Hearing Officer, to support their respective claims.

22. What recourse is open to a Taxpayer if his request for reconsideration is denied or his protest is not acted?

Should the Taxpayer’s request for reconsideration be denied or his protest is not acted upon within 180 days from submission of documents by the Commissioner, the Taxpayer has the right to appeal with the Court of Tax Appeals (CTA).

Any appeal must be done within thirty (30) days from the date of the Taxpayer’s receipt of the Commissioner’s decision denying the request for reconsideration or from the lapse of the 180 day period counted from the submission of the documents. (Sec. 228 of the Tax Code, as amended).

23. If the Taxpayer is not satisfied with the CTA’s decision, can he appeal the decision to a higher Court? Yes, he can. Decisions of the Court of Tax Appeals may be appealed with the Court of Appeals within fifteen (15) days from the Taxpayer’s receipt of the CTA’s decision. In the event that the Taxpayer is likewise unsatisfied with the decision of the Court of Appeals, he may appeal this decision with the Supreme Court.

24. Can a Taxpayer claim a refund or tax credit for erroneously or illegally collected taxes? Yes, he can. The Taxpayer may file such a claim with the Commissioner of Internal Revenue (Sec.229, NIRC), within two (2) years from the payment of the tax or penalty sought to be refunded. Failure of the Taxpayer to file such a claim within this prescribed period shall result in the forfeiture of his right to the refund or tax credit.

25. If a Taxpayer has filed a claim for refund and the Bureau has yet to render a decision on this claim, can the Taxpayer elevate his claim to the CTA?

Yes, he can, if the two (2) year period stated above is about to end, and the Commissioner has yet to render a decision on the claim. (Gibbs v. Collector, L-13453, February 29, 1960).

Saturday, 16 July 2016

PROFESSIONALS: Exempted in Securing Mayor's Business Permit and Paying Local Business TaxPROFESSIONALS, like dentists and
doctors, are exempted from securing a
Mayor’s Permit and paying Local Business Tax (LBT) for the
practice of their profession. Likewise, medical clinics are not
subject to the graduated tax since
they are considered necessary for the
exercise of the medical profession.
Thus, to impose a graduated tax on a
medical clinic on the premise that it is
a “business establishment rendering
or offering to render professional
services” would be to impose LBT on
the practice of profession.Bureau of Local Government Finance (BLGF) Opinion

dated 3 December 2015, signed 5 January 2016

Facts:Dr. X and the members of doctor's association of Muntinlupa Hospital requested for a refund of all payments made for the Mayor’s Permit and LBT exceptregulatory fees, from 2012 up to the current year, on the ground that they areexempt therefrom.Issues:1. Are professionals, like dentists or doctors, required to secure a Mayor’s Permit and pay LBT?2. Are medical clinics subject to the graduated tax rate similarly imposed uponbusiness establishments?Ruling:1. NO. Professionals who are required to take government examinations, like dentists or doctors, are not required to secure a Mayor’s Permit and to pay LBT as a consequence of the exercise of their profession.

Under Section 139(b) and Section 147 of the Local Government Code (LGC),a professional shall be entitled to practice his profession in any part of thePhilippines once he pays the professional tax in one province. After such payment, a professional practicing his profession will be exempt from any other national or local tax, license or fee, including the Mayor’s Permit or LBT.

2. NO. Medical clinics are considered necessary for the exercise of the medical profession. Thus, to impose a graduated tax on a medical clinic on the premise that it is a “business establishment rendering or offering to render professional services” would be to impose a local tax on the practice of profession.However, if the Local Government Unit concerned imposes such tax on medical clinics through specific ordinance, its validity can only be questioned or challenged in the proper courts of law.

Friday, 15 July 2016

SUBJECT : ORGANIZATION AND FUNCTIONS OF THE ENFORCEMENT AND ADVOCACY SERVICE, ITS DIVISION AND SECTIONS

TO : All Internal Revenue Officials and Employees

I.OBJECTIVE:

This Order defines the organization and functions of the Enforcement and Advocacy Service including its division and their sections pursuant to the Rationalization Plan under Executive Order No. 366.

II.ORGANIZATION:

The Enforcement and Advocacy Service shall be under the direct supervision of the Deputy Commissioner for Legal Group. It shall be headed by an Assistant Commissioner and shall be composed of the following divisions with their respective sections:

A.Litigation Division

1.Litigation Section I

2.Litigation Section II

B.Prosecution Division

1.Prosecution Section I

2.Prosecution Section II

C.National Investigation Division

1.Intelligence Section

2.Investigation Section

3.Criminal Investigation Section

III.FUNCTIONS:

ENFORCEMENT AND ADVOCACY SERVICE

1.Performs staff, advisory and consultative functions relative to tax fraud & intelligence operations, litigation & prosecution matters and development & investigation of tax case including those under the Run After Tax Evaders (RATE) Program.

2.Processes Claims for Informer’s Reward;

3.Formulates policies and administers work programs, standards, guidelines and procedures including forms relative to its functions;

4.Provides policy guidance and operational directions to all divisions under the Service relative to its function;

5.Establishes database for criminal violations of internal revenue laws and all court decisions on cases filed and all approved revenue issuances prepared by the Service/Divisions under it for regular updates of the Legal Information System;

6.Supervises and/or coordinates the activities of the Legal Division in the Regional Offices with respect to litigation and prosecution work;

7.Supervise and/or coordinates the activities of the Regional Investigations Division in the Regional Offices with respect to development of cases under the RATE Program.

8.Coordinates with proper offices in the implementation of its functions;

9.Monitors, evaluates and improves programs and activities under the responsibility of the Service;

10.Reviews, recommends and/or approves all reports and other actions of the Divisions under the Service;

11.Consolidates and/or prepares prescribed reports for submission to the offices concerned; and

12.Performs other functions as may be assigned.

A.Litigation Division

1.Formulates policies, work programs, standards, guidelines and procedures including forms relative to the litigation work on the civil aspect of internal revenue cases under the National Internal revenue Code (NIRC) of 1997, as amended, and other related laws and regulations;

2.Submits to the Service all court decisions on civil cases filed and all approved revenue issuances prepared by the Division for regular updates of the Legal Information System;

3.Conduct studies and researches relative to its functions;

4.Coordinates with proper offices in the implementation of the abovementioned functions;

5.Actively coordinates and extends all possible assistance to the Office of the Solicitor General (OSG) with regard to the cases of the Bureau of Internal revenue being handled/represented by the OSG;

6.Prepares prescribed reports for submission to the offices concerned;

7.Prepares revenue issuances relative to its functions; and

8.Performs other functions as may be assigned.

Litigation Section I and II

1.Institute civil actions involving internal revenue cases;

2.Represents the Commissioner of Internal Revenue in the hearing/trial and related proceedings involving internal revenue cases;

4.Prepares all pleadings, briefs and memoranda to be filed with the Court of Tax Appeals, Regional Trial Courts, and other courts and administrative agencies connection with internal revenue cases pending before the same;

1.Formulates policies, work programs, standards, guidelines and procedures including form relative to the criminal prosecution of violations of the NIRC 1997, as amended, and relatd laws and regulations;

2.Represents the Commissioner of Internal Revenue before the DOJ and the Courts in the preliminary investigation/hearing/trial of RATE cases and other criminal cases involving violations of NIRC of 1997, as amended, rules andregulations including other laws administered by the BIR;

3.Evaluates complaints of tax evasion and swears-in qualified affiants to the Affidavit of Confidential Information;

4.Evaluates Claims for Informer Rewards and determines whether the informer is entitled to it;

5.Coordinates with other BIR offices and/or external offices for the successful prosecution of violations of internal revenue laws and regulations;

6.Submits to the service all court decisions on criminal cases filed and all approved revenue issuances prepared by the Division for regular updates of the Legal Information System;

7.Conducts studies and researches relative to the criminal of the NIRC of 1997, as amended;

8.Actively coordinates and extends all possible assistance to OSG in case the OSG represents the Bureau/People of the Philippines on criminal cases involving tax evasion and/or violations of internal revenue laws, rules and regulationsincluding other laws administered by the BIR before the Courts;

9. Coordinates with proper offices in the implementation of the abovementioned functions;

10.Prepares prescribed reports for submission to the offices concerned;

11.Prepares revenue issuances relative to the abovementioned functions; and

12.Performs other functions as may be assigned.

Prosecutions Sections I and II

1.Institutes criminal actions against persons violating internal revenue laws and other tax laws administered by the Bureau of Internal Revenue;

2.Evaluates tax fraud cases referred by the National Investigation Division (NID), Regional Investigation Division, Large Taxpayers Service (LTS) and other offices involving a basic deficiency tax of at least One Million Pesos (P1,000,000.00) with the view of having them properly documented and substantiated to ensure successful prosecution thereof under the RATE Program;

3.Recommends and the files complaints for preliminary investigations to the Office of the Prosecutor or the Office of the Secretary of Justice, as the case maybe, on violation/s of internal revenue laws and regulations;

4.Interviews/prepares witnesses and evaluates evidence in connection with cases filed for violation of tax laws;

5.Summons, examines and tales testimony of persons pursuant to Sec. 5 of the NIRC of 1997, as amended, and other applicable laws;

6.Evaluates and receives confidential information filed by informants in relation to Section 282 of the NIRC of 1997, as amended;

7.Represents the Commissioner of Internal Revenue in the prosecution of the criminal cases involving tax evasion and/or violations of Internal Revenue laws, rules and regulationsincluding other laws administered by the BIR;

8.Acts on petitions for review filed by the taxpayers in the Department of Justice , Court of Tax Appeals and other judicial and administrative agencies relative to fraud cases under their jurisdiction;

9.Prepares all pleadings, briefs and memoranda to be filed with the Department of Justice, Court of Tax Appeals, regular courts and administrative agencies relative to tax fraud cases;

10.Submits to the Service data or materials relative to criminal violations of internal revenue laws, rules andregulations as well as information on the effective enforcement of the prosecution processes for regular updates of Legal Information System;

13.Recommends deportation of alien taxpayers and/or inclusion in the Hold Order List and Watch List of persons prosecuted for violation of internal revenue laws, rules,regulations and other related laws and makes necessary representation as government counsel before the Deportation Board;

14.Refers cases for the filing of criminal action to the Ombudsman;

15.Evaluates and process claims for reward of confidential informers;

16.Prepares digest court decisions involving criminal cases filed;

17.Prepares monthly accomplishment reports on cases being handled;

18.Represents revenue officials and personnel in criminal cases brought against them in connection with the lawful performance of their official functions; and

19.Performs other functions as may be assigned.

C.National Investigation Division

1.Formulates policies, work programs, standard, guidelines and procedures including forms relative to the investigation of tax fraud cases and the conduct of intelligence work;

2.Conducts preliminary investigation of confidential information filed by informants of the BIR;

3.Makes arrest and seizures in relation to the violation of any penal law, rule or regulation administered by the BIR as provided under Section 15 of the NIRC of 1997, as amended;

4.Conducts audit policy cases and prepares audit manuals as a result of the audit conducted;

5.Coordinates and integrates all intelligence activities of Regional Offices;

6.Maintains systematic records of all cases handled by the Division;

7.Coordinates with the proper offices in the implementation of its functions;

8.Prepares prescribed reports for submission to the offices concerned;

9.Prepares revenue issuances relative to the abovementioned functions; and

10.Performs other functions as may be assigned.

1.Intelligence Section

1.1Sets-up work programs, standards, guidelines and procedures relative to the conduct of intelligence work;

1.2Assists the Investigation Section by drawing up an effective intelligence operations;

1.3Identifies vital third party information needed in the implementation of tax prosecution programs and requests such information from concerned office;

1.4Obtains information on a regular basis from third parties through access to records;

1.5Summons, examines and takes testimony of persons pursuant to Sec. 5 of NIRC of 1997, as amended, and other applicable laws and regulations;

1.6Conducts surveillance on persons identified and suspected to be involved in activities in violation of the NIRC of 1997, as amended to establish prima facie case of fraud on the basis of a tax assessment pursuant to Sec. 5 of the NIRC of 1997, as amended;

1.7Consolidates and interprets intelligence information relating to tax fraud matters from all available sources;

1.8Conducts liaison activities with other intelligence, police and other investigative agencies for the conduct of arrests as well as raids and seizures in cases referred/approved by the Commissioner;

1.9Coordinates with the Regional Investigation Division concerned on all intelligence operations including those on activities pertaining to smuggling, syndicated crimes and the use of fake BIR accountable forms;

1.10Prepares prescribed reports and updates/status for submission to the offices concerned;

1.11Supervises the safekeeping of confidential documents of the Division and controls all data and communications received pertinent to cases handled; and

1.12Performs other functions as may be assigned.

2.Investigation Section

2.1Sets-up work programs, standards, guidelines and procedures relative to the conduct of investigation of tax fraud cases and those involving violations of the NIRC of 1997, as amended;

2.2Prepares specific plans in the conduct of tax fraud investigation of suspected criminal violators of internal revenue laws and regulations in coordinator wit the Intelligence Section;

2.3Investigates tax fraud cases as may be referred and/or approved by the Commissioner and those developed by the Division;

2.4Investigates violations of the provisions of NIRC of 1997, as amended, committed by the taxpayer;

2.5Plans, organizes and conducts inventory taking and surveillance work in order to establish a prima facie fraud case on the basis of tax assessment pursuant to Section 5 of the NIRC of 1997, as amended, upon mission orders issued;

2.6Develops and investigates criminal cases for prosecution;

2.7Assists in the prosecution of criminal cases;

2.8Prepares prescribed reports and updates/status for submission to the offices concerned;

2.9Maintains systematic records of tax fraud cases handled by the Section; and

2.10Performs other functions as may be assigned.

3.Criminal Investigation Section

3.1Sets-up work programs, standards, guidelines and procedures relative to the conduct of investigation of tax fraud by the BIR;

3.2Prepares specific plans in the conduct of tax fraud investigation of suspected criminal violators of internal revenue laws and regulations in coordination with the Intelligence Section;

3.3Investigates tax fraud cases as may be referred and/or approved by the Commissioner and those developed by the Division;

3.4Investigates criminal violations of the provisions of NIRC of 1997, as amended, upon mission orders issued;

3.5Plans, organizes and conducts inventory taking and surveillance work in order to establish as prima facie fraud case on the basis of tax assessment pursuant to Section 5 of the NIRC of 1997, as amended, upon mission orders issued;

3.6Develops and investigates criminal cases for prosecution;

3.7Assists in the prosecution of criminal cases;

3.8Prepares prescribed reports and updates/status for submission to the offices concerned;

3.9Maintains systematic records of tax fraud cases handled by the Section; and

3.10Performs other functions as may be assigned.

IV. REPEALING CLAUSE;

All issuances or portions thereof not consistent with the provisions of this Order are hereby repealed or amended accordingly.